Written by Allyson Cairns-Walji and Sophie Virji
On July 27, 2020, the Time Limits and Other Periods Act (COVID-19) (TLOPA), respecting timelines under the Income Tax Act (ITA) and the Tax Court of Canada Act (TCCA), came into force when Bill C-20 received Royal Asset. The legislation has not changed since it was first introduced on June 10, 2020, as part of Bill C-17.
Taxpayers need to be aware of the following important implications of this legislation:
- TLOPA suspends, for a maximum of six months, certain time limits in relation to proceedings before courts;
- TLOPA temporarily enables ministers to suspend or extend time limits and to extend other periods in relation to specified Acts and regulations for a maximum of six months; and
- TLOPA provides for the transparent exercise of the powers it confers and for Parliamentary oversight over the exercise of those powers.
While the TLOPA affects various deadlines in a variety of legal areas, this article focuses on the implications to tax rules and processes, including tax assessments, objections and appeals.
TLOPA: An Overview
TLOPA temporarily suspends or extends, in a flexible manner, certain time limits that may be difficult or impossible to meet due to COVID-19, and is intended to prevent unfair or undesirable effects that may result from expired time periods and missed deadlines during this exceptional time.
Time Limits Related to Court Proceedings
TLOPA suspends time limits related to court proceedings from March 13, 2020, to September 13, 20201 (the Suspension Period). This suspension applies to the commencement of court proceedings and any time limit in relation to steps within a court proceeding. The suspension also applies to applications for leave to commence a proceeding or applications for leave within a court proceeding. Although a court may vary the suspension of a time limit, the commencement date of the suspension must remain the same and the suspension cannot exceed six months. Courts may also make orders respecting the effect of failing to meet a suspended time limit, including orders that cancel or vary those effects.
TLOPA suspends until at least September 14, 2020, the following common time limits that would have otherwise expired during the Suspension Period:
- Appeals to the Tax Court of Canada. TLOPA extends the 90 days a taxpayer has to appeal a decision from the CRA's Appeals Division to the Tax Court of Canada under subsection 169(1) of the ITA.
- Applications to the Tax Court of Canada for an extension of time to appeal. If a taxpayer misses the 90-day time limit to appeal a decision from the CRA's Appeals Division to the Tax Court of Canada, subsection 166.2(1) of the ITA allows the taxpayer one year to apply to the Court for an order extending the appeal deadline. TLOPA extends this one-year limit.
- Replies to a Notice of Appeal. TLOPA extends the 60 days the Minister of National Revenue has to reply to a taxpayer's notice of appeal under subsection 18.16(1) of the TCCA.
- Appeals to the Federal Court of Canada. TLOPA extends the 30 days an appellant has to appeal a judgment of the Tax Court of Canada to the Federal Court of Appeal under subsections 17.6 and 18.24 of the TCCA.
- Applications to the Tax Court of Canada for an extension of time to object. If a taxpayer misses the deadline to file an objection, the taxpayer has one year from the expired deadline to apply for an extension of time to object. If the Minister rejects the application, then subsection 166.2(1) of the ITA gives the taxpayer 90 days from the Minister's rejection to apply to the Tax Court of Canada for an extension. TLOPA extends this 90-day limit.
Suspension and Extension of Other Time Limits and Periods including Limitation Periods for Reassessment
TLOPA also addresses other time limits and periods, including reassessments and objections by allowing the Minister to make an order suspending or extending certain time limits and other periods. A ministerial order under TLOPA cannot extend time limits and other periods past December 31, 2020, and does not apply in respect of a time limit or other period that ends on or after December 31, 2020. TLOPA includes a sunset clause such that a minister cannot exercise these powers after September 30, 2020.
In particular, the limitation period extensions in TLOPA are as follows:
- if a limitation period ended before March 13, 2020, then it cannot be extended through a ministerial order;
- if a limitation period ended on March 13, 2020, then it can be extended by ministerial order by no more than six months to September 13, 2020;
- if a limitation period ended on a day after March 13, 2020, and before July 1, 2020, then a ministerial order can extend the period by no more than six months to the date that is six months later; and
- if a limitation period ends on a day between July 1, 2020, and December 31, 2020, then a ministerial order can only extend the period up to and including December 31, 2020, but not into 2021.
A ministerial order may have retroactive effect back to March 13, 2020. It may also include provisions respecting the effects of a failure to meet the time limit or of the expiry of the period before the day on which the order was made, including provisions that cancel or vary those effects. Generally speaking, a ministerial order will suspend or extend timelines without requiring the consent of a person, court or other body. However, TLOPA enables the minister to include additional conditions in an order that provide flexibility to the application of the suspension or extension. For example, an order may provide that the suspension or extension will not apply without the consent of a person, court or body specified in the order.
TLOPA enables the Minister to suspend or extend the following specific tax time limits:
- filing deadline for scientific research and experimental development (SR&ED) deductions;
- filing deadline for investment tax credits;
- normal reassessment period; and
- applications to the Minister or Tax Court of Canada for an extension of time to object.
As of the publication date of this article, there are no ministerial orders suspending or extending the above listed time limits.
Due Process for the Extension of Time Limits
In order to achieve transparency and parliamentary oversight, a minister making an order2 to suspend or extend a time limit must adhere to the process outlined in TLOPA:
- the minister must make the order before October 1, 2020;
- after the order is made, the order, along with the underlying reasons, must be published on a Government of Canada website and in the Canada Gazette; and
- the order must be tabled in Parliament within three days after the order is made, or at the earliest opportunity, and must be referred to a committee of each House of Parliament.
Please contact any member of the Bennett Jones Tax group if you would like more information on how TLOPA may affect your court proceedings or tax audits.
1Or on any earlier day fixed by order of the Governor in Council made on the recommendation of the Minister of Justice.
2 Or the Governor in Council in the case of orders made pursuant to Section 6 of TLOPA regarding time limits relating to court proceedings.